Survey Results: How Market Leaders Respond to a 33% Drop in New Logo Revenue

Most companies earn the majority of their revenue from existing customers, and with the recession that began in March 2020, this is truer than ever. SBI’s quarterly pulse survey shows that companies are more dependent on their existing customers to make the number. In our conversations with our Client Advisory Boards, we have found that market leaders have taken actions throughout 2020 to proactively secure their customer base, thereby pre-empting new logo opportunities for their competitors. In the new logos where the team has maintained access, they are having difficulty mobilizing the buying teams, resulting in smaller, slower deals being won at lower rates.

However, during annual revenue planning, most companies invest most of their time talking about how to grow new logos.   This frequently results in an under-allocation of commercial investments to the existing customer base. In our annual research report, Revitalizing Growth, we show that Market Leaders can maximize the ROI of commercial investment by going “Back to the Base.”

With little margin for error, Market leading companies must take a disciplined approach to driving revenue from their existing customer base.   Many start by segmenting their prospects and existing customers into a ROAD model.  This assigns each account, based on current revenue and potential, into one of 4 categories: Retain, Opportunistic, Acquire, and Develop.  The Back to the Base strategy focuses on the accounts in the Retain and Develop quadrants.  An example can be seen below.

Our CEO, Matt Sharrers, shows how Market Leaders use a ROAD model in this one minute video.  To maximize the impact of this analysis, market leaders take a robust, disciplined approach to maximizing revenue from the existing client base.

Prepare the Strategy

 

An effective strategy must have a detailed understanding of the market landscape, and this includes a detailed understanding of the largest customers.  This is a data-driven exercise supplemented by an account plan, which is how the commercial team codifies its understanding of the account.

• Companies must calculate Customer Addressable Market (CAM) by account, but this must be calculated in a bottoms-up manner and consider each buying center. The most effective companies also align the use cases to a specific product.
• Within each buying center, calculate the revenue potential and the propensity to buy for each specific solution. This will be used to prioritize where to deploy commercial resources.
• Once the above are determined, the commercial team will begin the account planning process and determine the product fit for each account. The first phase of collaboration is between the commercial team and the revenue desk, where pricing and packaging can be customized.

   

Enable the Team to Execute

 

The account plan is a digital, living document that documents the strategy, and to be effective, it must be collaborative and dynamic. The commercial teams must establish an operating cadence to perform the following actions:

• Market leaders already have a well-developed buyer-driven sales process, a deep understanding of the buying decision team for each product, and well-deployed personas. Through the account planning process, these are mapped within each buying center.
• Once the buying decision teams (including both influencer and buying personas) are understood, the commercial team will develop an access plan for each member of the Buying Decision Team. This may include an internal referral (from another buying center), an external reference, or customized content.
• Market leaders already have a revenue enablement function, which generates insights, provides market intelligence and maintains a playbook. The commercial team uses this as a starting point and customizes the strategy to each customer.

   

Impact

 

Companies that have taken this strategy have seen improvements in commercial effectiveness.  In SBI’s Metrics that Matter, we see the following benchmarks:

• New Logos: 20-30%
• Cross-Sell (selling new products to existing customers): 47-52%
• Up-Sell (more of the same product to existing customers): 68-73%

   

By identifying and creating more Cross-Sell and Up-Sell opportunities, companies that execute this strategy have improved bookings per rep by 12-16%.  By expanding Customer Lifetime Value, they have also created operating leverage on their Customer Acquisition Cost.

Commercial leaders that go back to the base can significantly increase their chances of making the 2021 Number.  Furthermore, by successfully developing and executing the strategy, they improve commercial efficiency and generate incremental enterprise value. Take the first step to evaluate your team’s revenue growth capabilities with the Revenue Growth Maturity Model.